Look to the wisdom of Oz before promising on jobs

19th July 1996 at 01:00
Tony Blair's team should learn from Australia's experience where the ousted Labor party paid dearly for efforts to boost post-school education.

The Labour party has put increased opportunities for young people at the heart of its strategy for transforming Britain. Equal access to this world of education, training and temporary job opportunities is to be underpinned by major, as yet unspecified, changes in financial support for students and the young unemployed.

The recently-defeated Australian Labor government, which in power was much admired by visiting British shadow ministers, shared these priorities. Yet Australian experience illustrates how difficult it could be for the British Labour party to translate rhetoric into practice.

In Australia under Labor participation in post-school education increased significantly. One of the keys to progress was the introduction of Austudy in 1986. This provides comprehensive means-tested income support for full-time students over 16 and operates alongside the higher education contributions scheme which provides loans to cover university tuition.

Austudy is available to all those who participate in approved courses so long as they or their parents satisfy an income and assets test. Although the amount awarded is an entitlement, an increasing number of students opt to double its value by taking it as a loan. However, while the loan is interest-free, the student subsequently has to repay the full amount borrowed.

Both Austudy and HECS loans become repayable through taxes five years after course completion, but only when and if the individual's taxable income is more than average earnings (in 1996 about Pounds 13,500).

Between 1991 and 1995 the numbers being assisted by Austudy increased by more than 18 per cent, to just under 480,000 - about 48 per cent of all full-time students in eligible courses. Overall expenditure increased by 25 per cent to about Pounds 1.2 billion. Recipients get average payments of more than Pounds 34 a week.

Ironically, the growth in full-time participation has put increased strain on Austudy. This has prompted a vigorous debate about whether the system is intended to provide a benefit that pays enough for students to live on or, as government ministers have argued, it is a "supplement" to other income from parents, part-time work, or savings.

In 1995 an Australian Senate inquiry found structural problems with a system that was "under intense pressure", not least because part-time work is often hard to obtain and some parents provide little, if any, support. The Senate concluded that severe hardship was still a major factor behind high drop-out rates.

A key finding was that student hardship was often caused by significant administrative failures. These included delays and errors in processing applications, delays in determining eligibility, officials giving wrong and ambiguous advice and inconsistencies between different agency rules.

A major source of friction was between the eligibility rules for Austudy and the Job Search Allowance (the model for the new British Jobseekers Allowance). Enrolment in a full-time course disqualifies unemployed people from receiving JSA, but is a condition of eligibility for Austudy. Yet, as in Britain, there is confusion over the definition of a full-time course. The result is that some young unemployed Australians find their JSA eligibility is cancelled because the course they enrol on is subsequently defined as full-time. Others find they are disqualified from Austudy because the full-time course they enrolled on is termed part-time.

Even when they successfully participate in part-time courses young unemployed people are often required to drop out to take up places in an increasingly complex menu of short-term employment, training and job-hunt programmes.

Yet participation in employment schemes, especially the 50,000-place Landcare and Environment Action Programme designed for young people, has produced mixed results. More people re-enter unemployment than gain jobs, and even the best programmes struggle to secure job entry rates above 50 per cent.

In a context of high unemployment young Australians have become increasingly sceptical about the value of temporary job training schemes.

There is also evidence that groups of vulnerable young people continue to slip through the income support system, despite the availability of a more comprehensive benefit safety net for school-leavers than is available in Britain.

In the 1996 election campaign Labor's failure to reduce youth unemployment and its "cynical churning" of the unemployed through a merry-go-round of make-work schemes were highlighted by the opposition, Labor was unseated and replaced by the Coalition government.

Britain's Labour party should learn from this experience and be more cautious in its claims for the effect employment subsidies and an environmental task force will have on job prospects for the young unemployed. Without increased growth rates Labour may find that their solution to youth unemployment wins them little support and merely reinforces the existing widespread unpopularity of "schemes".

Labour can also learn from Austudy. Any new system of student support must be administratively efficient and underpinned by a comprehensive benefit safety net which encourages an easy and early move into full-time education or training.

Careful design would also be vital if a new approach, which is likely to combine means testing with loans, is to avoid creating additional disincentive.

In particular, if Labour's deal only provides students with enough to live on by increasing their debts it is unlikely to boost working-class participation.

Dan Finn is a senior research fellow at Portsmouth University

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